Case Digest (G.R. No. L-2598) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In C. Arnold Hall and Bradley P. Hall v. Edmundo S. Piccio et al. (86 Phil. 603, June 29, 1950), petitioners Arnold and Bradley Hall, together with respondents Fred Brown, Emma Brown, Hipolita Chapman, and Ceferino Abella, signed and acknowledged in Leyte on May 26, 1947, the Articles of Incorporation of the Far Eastern Lumber and Commercial Co., Inc., which was organized to engage in a general lumber business and related contracting activities. An attached affidavit of the treasurer declared that 23,428 shares were subscribed and fully paid by way of property contributions set out in an appended list. Immediately thereafter, the incorporators adopted by-laws and elected officers. On December 2, 1947, the articles were filed with the Securities and Exchange Commission for issuance of the certificate of incorporation, but no such certificate was ever granted. While the SEC proceeding was pending, respondents Brown et al. on March 22, 1948 filed Civil Case No. 381 in the Court of Case Digest (G.R. No. L-2598) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Incorporation of Far Eastern Lumber and Commercial Co., Inc.
- On May 26, 1947, petitioners C. Arnold Hall and Bradley P. Hall and respondents Fred Brown, Emma Brown, Hipolita D. Chapman, and Ceferino S. Abella signed and acknowledged the articles of incorporation in Leyte.
- The articles were accompanied by the treasurer’s affidavit stating that 23,428 shares were subscribed and fully paid through the transfer of specified properties.
- Commencement of corporate activities
- Adoption of by-laws and election of officers took place immediately after execution of the articles.
- The corporation began operating as a general lumber business and contractor.
- Filing for certificate of incorporation
- On December 2, 1947, the articles were filed with the Securities and Exchange Commissioner for issuance of the certificate of incorporation.
- As of the suit’s filing, no certificate of incorporation had been issued.
- Initiation of Civil Case No. 381
- On March 22, 1948, Fred Brown et al. filed a petition against Arnold C. Hall et al. in the Court of First Instance of Leyte, alleging that the entity was an unregistered partnership, beset by dissension, mismanagement, and fraud, causing financial losses.
- Plaintiffs prayed for dissolution of the alleged partnership and appointment of a receiver.
- Proceedings before the trial court
- Defendants moved to dismiss for lack of jurisdiction and insufficiency of cause of action.
- After hearing, Judge Piccio decreed dissolution of the company and, upon plaintiffs’ motion, appointed Pedro A. Capuciong as receiver upon a ₱20,000 bond.
- Attempted counter-bond and subsequent petition
- Petitioners offered a counter-bond to discharge the receiver, which the trial court refused to accept.
- Petitioners filed a special civil action before the Supreme Court to set aside all proceedings in Civil Case No. 381 and to enjoin further action by the trial court.
Issues:
- Whether the Court of First Instance had jurisdiction to dissolve the Far Eastern Lumber and Commercial Co., Inc., on the theory that it was a de facto corporation and that dissolution lies only in a quo warranto proceeding under Section 19 of the Corporation Law.
- Whether respondents Fred Brown and Emma Brown are estopped from denying corporate existence, having signed the articles of incorporation.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)